Immediate action on climate could save New Zealand tens of billions of dollars, according to a Westpac report.
Based on research conducted by EY and Vivid Economics, the report shows the New Zealand economy could benefit by $30 billion by 2050 if government and business take early action on climate change.
It also shows that New Zealand could simultaneously reduce carbon emissions and achieve economic growth.
The report models two scenarios: one that involves an earlier and smoother transition to a lower carbon economy, another that hypothesises a decade-long delay in action followed by a shock event that forces the nation to act.
The two models were developed in view of the UN Paris Climate Accord, which seeks to keep global temperature rises to within 2C of the pre-industrial era.
Westpac NZ chief executive David McLean said the report shows the need to take immediate steps to reduce greenhouse gas emissions.
"The alternative is waiting and taking action later, but that is likely to require more drastic changes in behaviour and over the long-term hit people harder in the pocket," he said.
"The average gross domestic product growth is forecast to be 2.015 per cent per year until 2050 if industries take early action on addressing climate change. If substantive action is delayed and companies have to play catch-up later, this falls to an average of 2.005 per cent. The cumulative difference is $30 billion."
The report comes off the back of recent remarks from Prime Minister Jacinda Ardern saying that Government was considering an end to oil and gas exploration in New Zealand.
"What we're working through at the moment are the long-run decisions," said Ardern at a press conference in March. "Any decisions we make now will have a long shelf life."
See the full report here:
A common criticism levelled at policy decisions based on climate change goals is that they will affect business profitability and therefore job security.
The National Party's energy and resources spokesman Jonathan Young warned in March that a decision to end oil and gas exploration could have a chilling effect on a multi-billion dollar contributor to the economy – particularly in his New Plymouth electorate.
"It is a $2.5b contribution to Taranaki and New Zealand's GDP, and pays significant royalties to the Government," Young told the Herald.
"The world is going to need oil and gas for many decades yet, and the Government is being far-sighted on climate change issues, but very short-sighted on how to get there."
Young also said the Government was putting too much store in the Paris Accord agreements, noting that the International Energy Agency could not identify enough activity from the 195 signatory nations to see the emissions reductions needed to keep the world under a further 2C of warming.
Although the report shows that action on climate change will result in a reduction of the economic contribution of some industries – including forestry and fishing, dairy meat and other food products and non-renewable energy generation – these will be countered by significant gains in renewable energy generation.
This trend is already being reflected in Westpac's financing decisions.
"Our lending to green businesses that are helping to provide solutions to climate change stands at $1.5 billion. We've set a new target to lift that to $2 billion by 2020," said McLean.
Since 2012, Westpac has also reduced lending to companies involved in fossil fuel extraction and production by 55 per cent to $318 million.
McLean said Westpac commissioned the report to get better insight into the risks facing the bank from climate change.
"We believe businesses need to be thinking about and planning for climate change now, not only from a risk perspective but also for the growth opportunities it presents to many parts of the economy," he said.
"Smart companies should start focusing on those opportunities as part of their business strategy."